Indices Set for Mid-Term Bearish Correction After Sharp Drop on Tuesday

Hello traders, welcome to Wednesday! Today, the economic calendar is relatively quiet compared to the busy sessions we’ve had earlier this week. To quickly recap Tuesday’s data: the UK claimant count change came in higher than expected, which was actually negative for the British Pound, but surprisingly the Pound didn’t react much and continued to climb. Meanwhile, inflation data from Canada showed a sharp drop, while inflation from New Zealand rose to 0.6%, although it still came in below expectations.

As for the market reaction, the U.S. dollar continues to strengthen, maintaining its position as the strongest currency at the moment. On the other side of the spectrum, we have weaker currencies like the Australian dollar, Japanese yen, euro, and New Zealand dollar, all of which have been losing ground.

Turning to futures, we saw a significant bearish correction across major indices yesterday. The sharp decline is creating a potential setup for a mid-term correction, as the markets seem to be leaning towards a more bearish sentiment for the second half of the week.

In the commodities space, oil prices suffered a sharp decline and are struggling to recover. However, gold remains strong, along with other precious metals, which are still performing relatively well.

Today, in terms of key events, we’re expecting UK inflation data in about an hour, with the CPI expected to come in at 1.9%. Additionally, we have a speech from ECB President Christine Lagarde later in the day. Beyond these, there are no major data points for Wednesday, so we’ll likely see a quieter trading session before tomorrow’s more eventful calendar.

Source: https://www.axiory.com/analytics/market-news/indices-set-for-mid-term-bearish-correction-after